‘ International Seminar on Economics and Marketing

of Tropical and Subtropical Fruits ‘

THE POTENTIAL OF MALAYSIAN THE POTENTIAL OF MALAYSIAN FRUITS IN MEETING GLOBAL FRUITS IN MEETING GLOBAL

DEMAND DEMAND

By : Tuan By : Tuan HajiHaji SamahSamah Bin Bin HasanHasan Deputy Director General Deputy Director General

FAMAFAMA

16 July 200716 July 2007

AgendaAgenda

IntroductionIssues Potential MarketMarket StrategiesConclusion

IntroductionIntroduction

THE GOVERNMENT’S ASPIRATIONS FOR THE AGRICULTURAL SECTOR

Develop the Agriculture Sector as the 3rd engine of growth.To be a prominent player in food production by the year 2010Net exporter of food by 2010 Agriculture is a Business

PARTICULAR VEGETABLES FRUIT FLOWERSupply (SS)* - Local Supply (MT) 642,796 1,873,092 153,385,242** - Import (MT) 265,808 47,973 2,954,839 - Total Supply (MT) 908,604 1,921,065 NADemand (DD)* - Local Demand (MT) 1,007,979 1,524,770 NA - Eksport (MT) 76,094 209,583 72,699 - Total Demand (MT) 1,084,073 1,734,353 NAShortage/Surplus ( SS - DD ) -175,469 186,712 NANo. of farmer for selected comodity** (people)

31,911 107,827 NA

Total no. of farmer** (orang) 40,920 162,463 NA

*Source: FAM A 2006**Source: Jab. Perangkaan M alaysia 2005

MALAYSIA:FOOD BALANCE SHEET 2006MALAYSIA:FOOD BALANCE SHEET 2006

Vegetables (15 commodities): Chinese Mustard, Long Bean, French Bean, Tomato, Cabbage Chilli, Okra, Pumpkin, Ginger, Chinese Kale, Engled

Angled Loofah, Cucumber, Water Comvulvolus, Brinjal

and Kacang

Botol

Fruits (15 commodities): Pineapple, Watermelon, Starfruit, Papaya, Guava, Manggo, Durian, Rambutan, Sappodilla, Duku

Langsat, Mangosteen, Jackfruit, Banana, Honey Dew

CAPITA CONSUMPTION OF FRUITS AND CAPITA CONSUMPTION OF FRUITS AND VEGETABLESVEGETABLES

IN MALAYSIA FOR 2004IN MALAYSIA FOR 2004--20102010

CommoditiesCapita Consumption ( Kg )

2004 2005 2006 2007 2010

Vegetables 40.40 41.25 42.03 42.83 45.76

Fruits 43.10 44.01 44.84 45.69 48.82

Source : FAMA

To move from net importer to net To move from net importer to net exporters by 2010exporters by 2010……..

RM Billion 2000 2006 2010 (target/ forecast)

Export 6.4 10.7 15.5

Import 11.4 19 14.3

BOT -5 -8.3 +1.2

Population (Millions)

23.5 24.8 28.9

BALANCE OF TRADE PLAN (2005 -2010)

…ambitious plan to reduce deficit in food import bill to net exporter by the year 2010

Commodity 2005 2006 2007 2008 2009 2010

Fruits

Vegetables

TOTAL

ProductionValue

1,587 211

1,746 317

1,920 463

2,112 666

2,323952

2,5561,353

ProductionValue

77196

833134

900173

972215

1,047263

1,133319

ProductionValue

2,358 308

2,579 451

2,820 636

3,084 881

3,3701,215

3,6891,672

Production – ‘000 ton ; Value – RM’ Mil

OF HORTICULTURAL CROPS

IMPORT AND EXPORT VALUES OF SEVEN AGRICULTURAL PRODUCE, 2001-2006

Seven (7) types of agriculture produce comprise cereals and cereal preparations, vegetables, fruits, sugar, sugar preparations and honey, coffee, cocoa, tea and its products; animal feeds, other food and its preparationsSource: Ministry of Agriculture and Agro-Based Industry (Jan, 2007)

Ω

= Provisional Data

Ω Ω

Issues Issues

Issue 1

HIGH COST PRODUCER

Imported inputsImported labourCompetition of Land useSmall scaleLow technology

Issue 2Inconsistency of Supply

Small farmScattered farmSmall commercial farmersSuitable varieties

Issue 3 :

PRODUCT PRESENTATION AND DEVELOPMENT

Little product differentiation- Products marketed as commoditiesUse of traditional packaging standardsMinimum grading and labeling practicesMinimal value adding and product development.

Issue 4

MARKET ACCESS

Tariff & Non Tariff BarrierFarm accreditationTraceabilityPackaging & Labeling

Issue 5

Food Safety and Quality Standards

i) More demanding consumers

-Changing lifestyle and consumer preferences

ii) Farmers slow in adopting Good Agricultural Practices (GAP) or the

Skim Akreditasi Ladang Malaysia (SALM)iii) International markets require compliance to food safety standards

like EUREPGAP and traceability

Market PotentialMarket Potential

FRESH FRUITS, VEGETABLES FRESH FRUITS, VEGETABLES AND FLOWERS EXPORT , 2003AND FLOWERS EXPORT , 2003--20052005

Product / Year

2003 2004 2005

Fruits 314.0 283.9 280.3

Vegetables 127.6 103.4 121.1

Flowers 101.1 132.3 148.9

Export Value (RM million)

EKSPORT DESTINATIONEKSPORT DESTINATION ( fresh & processed )( fresh & processed )

PRODUCTS 2003 2004 2005A. Fruits (RM Million ) Singapura 186.0 192.8 202.9 Hong Kong 98.2 83.7 95.2 Indonesia 10.3 17.2 19.3 Thailand 50.4 54.4 68.6 Netherlands 23.0 22.0 24.0 B. Vegetables (RM Million) Singapura 163.2 146.3 134.3 Indonesia 51.6 78.7 84.6 Netherlands 0.7 0.6 0.7 Brunei 4.2 2.5 2.5 UAE 1.9 3.2 3.7 C. Flowers (RM Million) Jepun 49.7 84.4 94.2 Singapura 44.7 38.4 52.0 Thailand 1.5 1.3 2.1 UAE 1.1 0.8 1.1 Hong Kong 1.0 0.8 (0.00)

Malaysia Fruits Export Vs WorldMalaysia Fruits Export Vs World

Malaysia’s Fruit Exports (US$1000) Growth 1985 1990 1995 2000 2004 85-94 95-04

World 7,606,682.21 13,818,849.00 19,657,841.78 18,488,305.78 27,266,595.10 9.23 3.64 Malaysia 5,253.00 15,720.00 27,095.00 36,038.00 36,153.00 18.50 3.20

Maket share (%) 0.07 0.11 0.14 0.19 0.13

Selected Fruit Type Market Share, MalaysiaSelected Fruit Type Market Share, Malaysia

Year/Fruit Type 1985 1990 1995 2000 2004

Bananas 0.15 0.17 0.19 0.20 0.11

Guavas, mangoes, mangosteens 0.38 0.14 0.12 0.36 0.23

Papayas 17.63 22.46 20.32 16.63 10.89

Pineapples 0.68 0.74 0.88 0.62 0.21Watermelons 1.73 3.85 5.67 4.71 2.03

Prospects for market diversification for a product exported by Malaysia in 2005Product : 08 Edible fruit, nuts, peel of citrus fruit, melons

0

5

10

15

20

25

30

35

40

45

50

0 5 10 15 20 25 30 35 40 45

Share of partner countries in Malaysia's exports, 2005, %

Ann

ual g

rowth

of p

artn

er cou

ntrie

s im

ports from

the wor

ld betwee

n 20

01-200

5, %

Germany

United KingdomFrance

Netherlands

Scale=5% of world imports

Canada

Russian Federat ion

Hong Kong (SARC)

Switzerland

India

China

United Arab Emirates

Saudi Arabia

Taiwan, Province of China

Singapore

Indonesia

Iran (Islamic Republic of )

Thailand

Bangladesh

Brunei Darussalam

Kuwait

Competitiveness of suppliers to Malaysia for the selected import product in 2005Product : 08 Edible fruit, nuts, peel of citrus fruit, melons

-15

-10

-5

0

5

10

15

20

25

30

35

40

45

50

-30 -20 -10 0 10 20 30 40 50 60 70 80 90 100

Annual growth of Malaysia's imports from the partner countries between 2001-2005, %

Ann

ual g

row

th o

f par

tner

cou

ntrie

s ex

port

s to

the

wor

ld b

etw

een

2001

-200

5, %

Gr owing wor ld market shar edecl ining shar e in Malaysia

Growth of total world exportsfor the selected product

Gr owing wor ld mar ket shar egrowing shar e in Malaysia

Decl ining wor ld mar ket shar egr owing share in Malaysia

Diagonal of constantmarket share

Decl ining wor ld mar ket shar edecl ining share in Malaysia

Average growth of Malaysia's importsfor the selected product

United States of America

Spain

Italy

Turkey

Scale=5% of world exports

Chile

France

Iran (Islamic Republic of)

South AfricaChina

India

New Zealand

Argentina

Australia

Viet Nam

Egypt

Thailand

Hong Kong (SARC)

Indonesia

United Arab Emirates

Tunisia

Republic of Korea

Singapore

Myanmar

Saudi Arabia

World’s Main Exporting Countries in Processed Products Based on Fruits and Vegetables , 2004

-2

0

2

4

6

8

10

12

-5 0 5 10 15 20 25

Yearly Growth - 2004%

Wor

ld’s

Exp

ort S

ize %

CHINA

MALAYSIA(Kedudukan ke 47)

SPAIN

UK HUNGARYARGENTINA

MEXICO

PHILIPPINES

GREECE

BRAZIL

USA

THAILAND CANADA

FRANCE

POLAND

TURKEYGERMANY

ITALY

NETHERLANDS

BELGIUM

Yearly Average Growth Rate

World’s Export 2000 - 2004 %

Top 20 World Exporting Countries 2004

-2

0

2

4

6

8

10

12

14

16

-10 -5 0 5 10 15 20 25 30

Yearly Growth 2000 - 2004%

Wor

ld E

xpor

t Mar

ket S

ize%

USA

PHILIPPINES

ECUADOR

ARGENTINA

COSTA RICA

BRAZIL

INDIA

USA

MEXICO

NEW ZEALAND

IRAN

SOUTH AFRICA

CHINA

GERMANY

CHILE

TURKEY

NETHERLANDSBELGIUM

ITALY

SPAIN

MALAYSIA(Kedudukan ke 52)

Yearly Average Growth

World Export 2000 - 2004%

Source : FAO Statistical Database, FAOSTAT

IMPORT OF FRESH TROPICAL FRUITS :Major Countries 1998 - 2002

IMPORT OF FRESH TROPICAL FRUITS :IMPORT OF FRESH TROPICAL FRUITS :Major Countries 1998 Major Countries 1998 -- 20022002

Import Quantity (mt)

Germany1,084,210

10%

United States of America1,944,544

18%

Others4,578,654

42%

Belgium713,060

7%

France657,796

6%

United Kingdom810,586

7%

Japan1,036,184

10%

Import Value (US$000)

Japan1,499,720

7% United

Kingdom1,266,881

6%

Germany1,771,088

8%

United States of America5,967,280

26%

Belgium1,171,433

5%

France1,050,209

5%

Canada943,651

4%

Others9,180,705

39%

Focus FruitsFocus Fruits

ExistingStarfruitsPapayaPineapplesMelonBananaMangoesRambutanMangosteenDurianGuava

NewDragon FruitsPomeloJackfruitsSallacaLonganPulasanDokong

Focus MarketsFocus Markets

TraditionalSingaporeHong KongSaudi ArabiaUAEBruneiEU - Netherlands

NewChinaCanadaTurkeyPakistanIndiaCIS - Poland

StrategiesStrategies

a. Improve ProductivityModern farming – mechanize , new technology, Cluster Farming – all facilities in one area Precise farming – variety, time, quantitiesLess wastage – post harvest handling , logistic

b. Market AccessFTA’s , Bilateral/TrilateralFarm accreditation – GAP, EUREPGAPSPS – One Stop Treatment Centre , PRAPackaging , Labeling & Grading Agriculture Attaché ( 7)

c. Promotion

Trade Fairs, Trade Mission, Buss MatchingIn-Store PromotionBranding – Malaysia’s BestPromotional material – pamphlets, leafletArticles in magazine, journal

•• Promotional ProgramsPromotional ProgramsInternational Trade Fairs

2005 - 15 promotions

-Fruit Logistica Berlin

-Gulf Food Dubai

- Product promotion

- exposure to private sector

- market testing

ININ--STORE PROMOTIONSTORE PROMOTION

•• Promotional ProgramsPromotional Programsv. Branding

‘Malaysia’s Best’ seal of quality and safety

Starfruits

Papaya

Mango

Watermelon

Pineapples

Pithaya

Pomelo

Banana

•• Promotional ProgramsPromotional ProgramsInvestment Mission (AMIM)

- Attract foreign investors

- Networking

d. New Products

Minimally processed productsNew varieties – Pithaya, pomeloFrozen, chilledProcessed – chips, freeze dried, dried

Improve product presentation through grading, packaging and labeling Encourage farmers to adopt the ‘ Good Agriculture Practice’ (GAP) Scheme Use facilities in Centers Of Excellence to improve quality

Require farmers’ compliance to the Grading, Packaging and Labeling Regulation .Encourage farmers’ participation in contract farming

e.Improve Quality

Conduct market studies to identify and understand the

world market status of horticultural produce.

Monitoring, reporting and dissemination of real time

information on market situations and prices

f. Intensify Market Research & Intelligence

g. Regional Approachg. Regional Approach

Common interest, products, season, market

Challenges

Spirit of ASEANShare of market and production informationTF Net as a medium of communicationExchange of expert (production, technical )Regional market access initiatives

h. Formation of Business h. Formation of Business Council Among TF Net Council Among TF Net

MembersMembers

Follow-up by the business people Active participation by private sector in regional business meetingShare of market information among members

ConclusionConclusion

ConclusionConclusionVast potential for Malaysian tropical fruits to cater global demand for exotic segment.The success lies on the ability to produce at cost competitive, high quality, comply to international accreditation, innovative product and market access.

“

Terima Kasih “